Tax Responsibilities for a UK Citizen with a US Green Card Working Remotely for a UK Company in the US

As a UK citizen with a US green card, working remotely for a UK company while residing in the US, you have specific tax responsibilities in both countries. This article will provide a detailed breakdown of your obligations and guide you through the process of navigating dual taxation.

US Tax Responsibilities

Worldwide Income Taxation

As a US green card holder, you are considered a US tax resident. This means you are required to report and pay taxes on your worldwide income to the Internal Revenue Service (IRS), regardless of where that income is earned.

Filing Requirement

You will need to file a US federal income tax return, Form 1040, annually, reporting your income from the UK company along with any other income you may have.

Self-Employment Tax

If you are considered self-employed, i.e., if you are not classified as an employee of the UK company, you may also need to pay self-employment taxes, which include Social Security and Medicare.

State Taxes

Depending on the state you live in, you may also have state income tax obligations. Each state has its own rules regarding the taxation of income.

UK Tax Responsibilities

Residency Status

If you become a tax resident in the US, generally you are a tax resident if you spend more than 183 days a year in the US. You may no longer be considered a tax resident in the UK according to the UK’s Statutory Residence Test.

UK Taxes on Income

If you are no longer a UK tax resident, you typically won't have to pay UK income tax on your earnings from the UK company. However, if you remain a UK tax resident, which is possible if you have significant ties to the UK, you may still have UK tax obligations.

Double Taxation Relief

The US and UK have a double taxation agreement (DTA), which means you can often claim relief for taxes paid in one country against your tax liability in the other. You may need to file additional forms like Form 1116 for foreign tax credits when filing your US tax return.

Practical Steps

Determine Residency

Assess your residency status in both the UK and the US based on the rules outlined above.

Keep Records

maintain detailed records of your income tax payments and residency days in both countries. This will help you stay organized and ensure your tax compliance.

Consult a Tax Professional

Given the complexity of international tax obligations, it’s wise to consult a tax professional with expertise in both US and UK tax laws to ensure compliance and optimize your tax situation.

Summary

In summary, as a US green card holder working remotely for a UK company, you will primarily be responsible for US taxes on your worldwide income. Your UK tax obligations will depend on your residency status. It's important to stay informed about both tax systems and seek professional advice if needed.